Emerging Markets Rates and Currencies Handbook

Tax Summary – Brazil Brazil Other Taxes/Duties • If tenor < 180 days, 6% flat IOF tax applied on the FX transaction for inflows occurred until March, 21st, 2022 • If tenor > 180 days, no IOF, regardless of the date of the inflow • For inflow occurred as of March, 21st, 2022, IOF zero regardless of the tenor • IOF : Min (1.5% p.a., 1.5% “flat”) + 0.38% “flat” up- front. • Export financing exempt • - For foreign investors trading derivatives under Resolution 4373: • - 10%WHT on derivatives • - PIS/Cofins on Financial gains: 0% if derivative traded for hedging purpose; 4.65% otherwise. • - Due process and limitations on amount and timing of dividends and capital repatriations • - 0.38% FX-IOF tax on inflows (injection) and outflows (capital reduction) Deductibility of (FX) Losses • Fully deductible • - Onshore: Losses deductible only for hedging transactions. Losses derived from speculative transactions may only be deducted up to the limit of the gains derived from variable income transaction • - Offshore: Losses are not deductible, unless trade done on an exchange • N/A Deductibility of interests • - Non-tax haven lender: Yes, up to 2x capital • - Tax haven lender: Yes, up to 30% of capital • - Must observe new transfer price rules for maximum deductibility locally • - Non-tax haven lender: Yes, unless guaranteed by related company, then limited to 2x capital or 30% of capital if guarantor domiciled in tax haven • - Tax haven lender: Yes, up to 30% of capital • Fully deductible • N/A • - Dividends are not deductible for the local income tax purposes, except for INE (interest on net equity).The amount of INE capped at 50% of current net- profits or 50% of the sum of accumulated profits and profit reserves, whichever is higher, and subject to Brazil general WHT rates Note: Citigroup Inc. and any of its affiliates do not provide accounting, tax, or legal advice. Please seek advice from a relevant licensed advisor. Source: Relevant legislation, publicly available sources Country Tax Deductibility and Considerations Inter-Co Debt Offshore Derivatives Equities Bank Loans Offshore Local Borrowing